IMF Warns Higher Oil Prices and El Nino Pose Key Risks to India's GDP Growth
The International Monetary Fund (IMF) has warned that India's economic growth for the 2026/2027 fiscal year could be lower than expected due to two key downside risks: the re-escalation of the Middle East war driving up oil prices, and the El Nino weather phenomenon threatening monsoon rains. IMF resident representative Ranil Salgado told Reuters that the expanding conflict has implications for oil prices, while El Nino could lead to a poor monsoon. The IMF had already cut its GDP growth forecast for India by 10 basis points to 6.4% in early July, citing higher energy prices. The collapse of a U.S.-Iran ceasefire led to renewed closure of the Strait of Hormuz, spiking Brent crude by 16% to nearly $90 per barrel. India, which imports over 85% of its oil, is scrambling to diversify supply sources, including record volumes from Russia and new deals with Venezuela and Brazil, to offset lost Middle Eastern crude.
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